A Wave of New Virtual Reality Hardware on the Horizon Enters an Uncertain Market

After a somewhat quiet 2018 in terms of new virtual reality (VR) hardware, 2019 is off to a much quicker start and is looking to maintain that pace throughout the year. Oculus has its Quest and Rift S; HTC has VIVE Focus Plus, VIVE Cosmos, and the recent eye-tracking refresh VIVE Pro Eye; HP is getting involved with its reverb head-mounted display (HMD); Valve, the company behind PC platform Steam, has teased its Index HMD; and rumors are swirling about a wireless follow-up to Sony PSVR.

Some of the devices are more iterative than revolutionary, but there are also unique and welcome additions. Eye tracking with the new VIVE Pro is a great value add, allowing a new input method for any use case while also opening up opportunities for things like foveal rendering to create some processing headroom. HP’s Reverb HMD is pushing resolution first and foremost, with 2160x2160 per eye, about twice the average. Oculus’ Rift S has the iterative resolution and comfort enhancements expected, but also the removal of desktop sensors as a requirement, with the headset using inside out tracking instead. Oculus Quest is perhaps the most talked about, after a relatively successful Oculus Go launch showing the potential of a standalone Oculus HMD. An improved piece of hardware with an extra year of content maturation, with the expected benefits of standalone VR in ease of use, will create a compelling package.

After a lack of broad success in first generation consumer-targeted devices, enterprise continues to be a focus for many. HTC’s lineup has grown significantly since the initial VIVE launch, and now the both the Focus and Pro SKUs are marketed as enterprise-focused devices. If anything, the price of the VIVE Pro has ensured a more conservative consumer interest.

This enterprise activity highlights a larger market trend where enterprise VR continues to grow, driven by increasing knowledge of the market and more defined ROI use cases. Compared to the consumer ecosystem, value in traditional areas like gaming and entertainment is objectively understood, but not yet capitalized on. Whether consumer or enterprise, content remains the most important point of contention. Enterprise content creation, where specific use cases are identified and experiences are built toward that, is a little more straightforward. Consumer content has proven difficult; Google’s internal VR studio, Spotlight Stories, was shuttered recently despite an Emmy-winning level of success. Even though some smaller scale efforts have seen moderate success, we have yet to see a truly triple-A pure VR game launch. Retail and marketing are expanding, with brands identifying value in immersive product viewing and customization. Education and tourism are also poised for growth. The traditional media and entertainment space, where VR was thought to fit most naturally, has not grown as expected.

Cloud gaming could play a role here. While developers still need to be on board from the beginning, subscription offerings like VIVEPORT could bring about a wider user base, buying into a service rather than individual games that have relatively unknown value. With improvements in edge compute and streaming, along with 5G, device costs could plummet while content quality increases, a best-case scenario assuming streaming quality is acceptable.

Even with this upcoming wave of hardware updates and new releases, there is still an incredible amount of progress to be made overall; prices still have a long way to fall, especially for high end units like VIVE Pro. At the same time, a race to the bottom is dangerous as a minimum level of quality of experience is required; resolution and refresh rate must be at or above parity with flagship smartphone displays, which limits the potential price drop.

Mobile-based VR housings, like Google Daydream and Samsung Gear VR, continue to remain surprisingly dormant despite the fact that these HMDs are often the best price/performance option available (assuming smartphone ownership). The drawbacks of smartphone-based systems—mainly battery life and heat dissipation during use—seem to be outweighed in theory by the benefits of lower prices and increased accessibility. The impact of well-understood and mature content development and distribution ecosystems in respective app stores also cannot be understated. Even so, follow-ups from the likes of Google for Daydream and Samsung for Gear VR have not manifested.

This lack of mobile hardware does create opportunity for standalone devices to fill in, which is, again, why Oculus Quest and its competition are being watched closely. If HMDs like the Quest can offer a higher quality experience compared to Daydream or Gear VR without pushing prices too high, the transition from mobile dominance to standalone dominance could continue. Qualcomm is playing both sides, with efforts around extended reality (XR) at the silicon level on up through partnership and development programs. Its “viewer” terminology for a tethered (wired or wireless) HMD to a Qualcomm-based device could become a dominant terminology as that device type grows in presence; heat dissipation is no longer an issue, and battery life can be improved by not using the smartphone’s display and sensors, but only its processing power.

If anything, 2019 is shaping up to be an exciting VR year. There’s much progress to be made with not only hardware, but also software and content. Enterprise is, perhaps unexpectedly, taking the reigns for VR as of now, and could lead the market to unexpected areas. After a few years of maturation, the content development ecosystem could start ramping up in the near future, with more big-budget and big-name content being pushed to consumers. While there isn’t yet a killer app for consumer VR, there are an increasing number of slightly less than killer apps available today and on the horizon; with help from 5G and cloud gaming, falling prices, budding partnerships, and simply time to amalgamate these parts together, both enterprise and consumer VR are, at least in theory, set up for success.